Personal investment companies

Summary: If you have a sum that you wish to invest and grow for the benefit of your heirs, but want to retain future control of how that investment is managed and distributed a Personal Investment Company (PIC) might be the right structure for you. Here we summarise the benefits of a PIC, including the tax implications.

Personal Investment Company (PIC)

is a tax efficient vehicle in which to accumulate wealth;

a PIC should be considered as a long-term investment strategy;

can hold any asset class;

taxed in the same way as any UK company so all income and gains subject to UK corporation tax at 20% (falling to 19% from April 2017 and 17% from April 2020) - compared with top individual tax rate on income of 45% and on gains of 28% and trust rate of 45%. This can mean that the PIC potentially has over 20% extra income to reinvest compared with an individual investor;

gains will be subject to tax at 20% but PIC can claim indexation allowance when calculating gains;

investment management fees will be a deductible expense in calculating the PIC’s taxable profits. An individual investor cannot deduct such fees in calculating his taxable income;

rental losses can be set off against other income.

A PIC is a tax-efficient way of growing wealth for your heirs while retaining control.

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